The State Bank of Pakistan (SBP) has announced to enhance the loan size for micro-enterprises up to one million rupees. "In order to enable Microfinance Banks (MFBs) to serve the micro-enterprise credit requirements, it has been decided to enhance the loan size to Rs 1.0 million for micro-enterprises employing up to 25 individuals (excluding seasonal labor)," said SBP circular. Some 100 percent increase has been announced in the loan size as previously MFBs were allowed to extend loans to micro-enterprises up to a maximum of Rs 500,000.
According to SBP, despite enhancement in loan size, the existing limit of 40 percent on enterprise lending (as percentage of gross loan portfolio) will remain unchanged. Further, the maximum exposure limit for borrowers who are able to avail both general and micro-enterprise loans shall not exceed Rs 1.0 million.
The enhanced loan size will be allowed to those MFBs which have graduated from pilot micro-enterprise lending programs to commercial scale. However, prior to extending micro-enterprise loans exceeding Rs 500,000, these MFBs will apply to this department for approval. SBP shall grant approval based on satisfactory assessment of the capital position and readiness level of the applicant MFB.
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